We updated our (long ongoing) inflation expectation series right after the Federal Reserve raised rates for the first time since 2006, when all breakeven rates up to 30 years out were topping out at less than 1.7% for a year. So, let’s update our readers again – especially you US Government debt buyers and especially […]
One of the topics we like to revisit time and time again is our calculation of the inflation, measured in CPI, that the market is expecting over various timeframes. We most recently looked at inflation expectations at the end of August, and noted a recent uptick. In fact, you don’t even have to wait for […]
One of the longest running series on this site is market inflation expectations. We wanted to ease that math for us and you a bit, so we built this inflation expectations calculator. In those articles we use two long running daily treasury reports – constant maturity treasury rates and real yields, and subtract them to […]
One important thing to have an idea of – for personal and business reasons – is the amount of inflation expected in the future. Think about it – by having a reasonable number to plan for the erosion of the value of your money, you will better be able to make decisions on what loans to take out, what purchases to make, and how to invest.
Luckily for you, there are a few ways to gauge these predictions, which don’t resort to guessing, praying, or going to a fortune teller. The methods are also more sophisticated than taking the last few years worth of data, drawing a trend line, and attempting to extrapolate future results.
Media and fellow bloggers alike enjoy bemoaning the hazardous plague of inflation. I will show that not only is this argument not grounded in reality, but that it also ignores many ancillary benefits of an inflationary rate: spending encouragement, debtor relief and avoidance of a deflationary spiral.
In an earlier article, I detailed how you could check on inflation expectations using information publicly available from the Department of the Treasury. Using the data they provide, it is simple to calculate the market’s expectations for inflation over the next 5, 7, 10, and 20 Year periods. Let’s take another look not at the 2009 inflation rate, but the expected inflation rate of the future viewed through ‘2009’ colored glasses.